Breaking News from The Globe and Mail
Monday, February 27, 2006
LONDON British utility National Grid PLC said it agreed to buy Brooklyn-based electricity and natural-gas distributor KeySpan Corp. for $7.3-billion (U.S.) in a deal that would create the third-largest energy delivery utility in the United States.
National Grid said Monday it was paying the $7.3-billion in cash and also taking on debt estimated at $4.5-billion. KeySpan shareholders will receive $42.00 in cash per share.
Upon completion of the deal, National Grid will serve nearly 8-million customers in New York state and New England, the companies said.
National Grid, which owns and operates Britain's power grid, already has a large presence in the United States. It distributes electricity and natural gas to nearly 4-million customers in Massachusetts, New Hampshire, New York and Rhode Island.
KeySpan is the fifth-largest gas-distribution company in the United States and the largest in the Northeast. It operates the power transmission system for the Long Island Power Authority, bringing electricity to more than 1-million customers in New York's Nassau and Suffolk counties and the Rockaway Peninsula in Queens.
KeySpan's shares closed up 32 cents at $41.41 on Friday, near the high end of the stock's 52-week range of $32.66 to $41.52 on the New York Stock Exchange.
National Grid's shares rose 1.4 per cent in morning trading on the London Stock Exchange to 622 pence ($10.19).
The acquisition is to be completed by early next year.
National Grid said it expects to deliver $200-million per year in savings.
Michael E. Jesanis will continue as president and CEO of National Grid USA. Bob Catell, currently chairman and CEO of KeySpan, will join the National Grid board as deputy chairman and will also become chairman of National Grid USA, National Grid said.
“KeySpan is an excellent operational and geographic fit and a natural extension of our business and our strategy,” said Roger Urwin, National Grid Group chief executive.
“This transaction will deliver significant value to shareholders and customers of both companies,” said Mr. Catell.
“KeySpan will become an important part of one of the largest and most efficient energy delivery companies in the world, and have access to additional financial resources to invest in our energy infrastructure and growth opportunities,” Mr. Catell said.
© The Globe and Mail